Stocks plunge as Wall Street fears economy has weakened

End of the recession euphoria was short-lived as stocks on Wall Street fell sharply and oil prices fell the most in a month.

Stocks had a volatile week: After rising 200 points on Thursday, the biggest one-day gain for a month, the Dow Jones Industrial Average plunged nearly 250 points as negative economic data outweighed third-quarter growth figures.

It was the Dow's 10th triple-digit point move this month.

New data showed spending by Americans fell 0.5% in September, the largest drop since December 2008, while consumer confidence in October also slipped.

The Dow slid 249.85 points, or 2.5%, to 9712.73, up slightly from its September close of 9712.28 but down 2% for the week.

All 30 Dow components closed down in the broad sell-off, led by financial components Bank of America, off 7.3%, and JP Morgan Chase, down 5.8%.

Canadian stocks fell and completed their first monthly decline since February, led by commodities companies, as Canada’s gross domestic product unexpectedly shrank 0.1% in August due to lower oil and gas extraction.

Suncor Energy lost 2.8% as oil prices slid the most in a month. Toronto-Dominion Bank declined 3% as financial stocks slipped. Barrick Gold declined 1.8% on falling bullion prices.

The S&P/TSX Composite Index declined 164.47 points, or 1.5%, to 10,910.75 after rallying 2.5% on Thursday, the biggest rise in three months.

European shares ended a negative month on a down note, pulling back as commodity-sector shares weakened and then extending losses into the close as investors showed renewed reluctance to take on risk.

The pan-European Dow Jones Stoxx 600 index fell 2% to close at 236.93.

Miners, such as Eurasian Natural Resources – down 6.2% – declined and oil producers also moved lower as metal and oil futures slipped.

The U.K. FTSE 100 index lost 1.8% to settle at 5044.55, the French CAC-40 index declined 2.9% to finish at 3607.69 and the German DAX fell 3.1% to close at 5414.96.

Commodities: Oil, gold down

Crude oil fell the most in a month as scepticism rose about the US economic recovery.

Crude oil for December delivery fell $US2.87 to end the session at $US77 a barrel in New York, the biggest decline since September 24. Prices dropped 4.3% this week, the first decrease this month.

Futures climbed 9% in October, the biggest monthly increase since a 30% rally in May.

Gold may continue decline in the coming week as a stronger dollar curbs demand, a survey showed.

More than half of 23 traders, investors and analysts surveyed by Bloomberg said bullion would fall and only a third forecast higher prices.

Gold for delivery in December was down 0.8% this week at $US1,047.50 an ounce in New York, heading for the first weekly decline in five weeks.

Currencies: Dollar, yen up

The yen and dollar gained versus the euro and extended their first weekly advances in four weeks.

Japan’s currency advanced against all of its 16 most-traded counterparts tracked by Bloomberg after the central bank said it would stop buying corporate debt at the end of the year.

The yen strengthened 2.9% to ¥132.61 per euro, from 135.51 on Thursday. The dollar climbed 0.7% to $US1.4719 per euro, from $US1.4822. The yen advanced 1.3% to ¥90.09 per dollar, from ¥91.41, after appreciating beyond ¥90 for the first time since October 15.

The Swiss franc slid as much as 0.4% to 1.5173 versus the euro on bets the Swiss National Bank intervened to prevent the currency from extending its gains. The franc earlier reached 1.5083, the strongest level since October 5.

Canada’s dollar tumbled versus its US counterpart, registering a second straight weekly loss, as the economy unexpectedly contracted in August.

Canada’s dollar depreciated 1.7% to $C1.0848 per US dollar, the weakest level since October 2, from $C1.0665 yesterday, when it gained as much as 1.4%. One Canadian dollar buys 92.19USc. For the week, the Canadian dollar was down 2.9%.